Former head of the Federal Reserve, Ben Bernanke, on Thursday said advisors’ services are not only critical to helping investors, but also to a healthy economy.
“Helping people meet their life goals financially is very important. Many people don’t have that kind of advice or knowledge and that costs them,” Bernanke said in comments at the 2015 Pershing INSITE conference in Orlando. “But it’s also also important for the economy and society more generally.”
The financial system supports our economy, he said, making us more productive and more dynamic through the allocation and use of capital. It’s important, Bernanke says, to understand that advisors’ investment decisions do not have just financial implications for their clients. “What they’re doing is taking the saving in society and making them available for all different kinds of business and investments that make our economy grow. So it’s critical for investors, but also from the point of view of the allocation of capital to different parts of the economy,” he says.
“If there’s anything the crisis taught us, a stable financial system and providing financial services…is absolutely essential for a healthy economy,” Bernanke added.
Looking back at the financial crisis, Bernanke noted that there were several lessons he learned that advisors can replicate in their practices. Most fundamentally, Bernanke says it was important for him to operate within the framework of a deliberate plan. “In the short run, you have to put out the fire, but it’s also important once the fire is out,” he says.
The second was the importance of engaging the people in an organization. Bernanke called for scheduled meetings with a wide range of Fed employees, not just those near the top, to get their input on strategies. “That engaged people. It was not only useful in getting their ideas, but it also made them invested in what’s happening and internalize the goals of the organization.”
The final piece of advice Bernanke gave was around the importance of communication, both internally and externally. “Let people know what you’re doing, why you’re doing it and explain to the public and your clients what you’re doing, why you’re doing it, how you help them and what the alternatives are,” he says.